Gold Prices Soar to Record Highs Amid Central Bank Demand and Dollar Weakness

Gold prices hit a fresh all-time high on board-based US dollar selling.  It hits a high of $2877  and currently trading around $2876.

Central Bank Purchases and Demand Trends

As of February 5, 2025, central banks globally bought more than 1,000 tonnes of gold in 2024, amounting to 1,045 tonnes, a small decrease from the year before. Poland's National Bank was the biggest buyer, buying around 90 tonnes; Turkey and India also scored highly. Global gold demand hit a record high at 4,974 tonnes, largely due to these central bank purchases and increasing gold prices. Investment demand increased 25% to an all-time four-year high of 1,180 tonnes as investors sought safe assets due to economic uncertainty. However, gold jewelry dropped by 11% to 1,877 tonnes as its price was considered too high, hence a great discouragement towards buyers, mainly in China. The interest displayed by the central banks in gold tends to make it a go-to stable asset during economic crises. Their movements can influence the future prices and trends of the market.

Rate Pause Sentiments Climb

According to the CME Fed Watch tool, the chances of a rate pause in Mar 19th 2025 meeting have increased to 83.50% up from 77.20% a week ago.

Technical Analysis: Key Levels and Trading Strategy

Gold prices are holding above the short-term moving averages 34 EMA and 55 EMA and long-term moving averages (200 EMA) in the 4-hour chart. Immediate support is at $2845 and a break below this level will drag the yellow metal to $2820/$2800/$2770/$2740. The near-term resistance is at $2880, with potential price targets at $2920/$2950.

It is good to buy on dips around $2828-30 with a stop-loss at $2790 for a target price of $2900.